Vastly Inflated Construction Costs Are No Way to Run a Railroad: Cameron on Transportation

Why is transportation construction so expensive in our area? What kind of honor was it when New York City recently surpassed Zurich (one of the most expensive cities in the world) as No. 1 on the most-expensive-place-to-do-underground-construction dishonor roll?

The highly respected Regional Plan Association has studied that question and offers some explanations and frightening examples.

Focusing on three recent MTA mega-projects in New York City — the Second Avenue Subway, the No. 7 subway extension to Manhattan’s west side and the LIRR’s East Side Access project (ESA), their findings make for depressing reading.

Let’s focus on the ESA plan, an ambitious project to construct new rail tunnels under Park Avenue and a new rail station 10 stories beneath Grand Central to serve LIRR trains. This is an important project for Connecticut as it will eventually allow some Metro-North trains to run across the Hells Gate Bridge to Penn Station.

Once estimated to cost $4.3 billion and to be finished by 2009, ESA may not be finished until 2022 at a total cost of $12.2 billion. So, what happened?

The RPA report says the project was initially pushed by politicians who grossly underestimated the initial budget just to get it approved. Because Metro-North and the LIRR (both part of the MTA) operate as silos, they had trouble coordinating their efforts. Worst of all, the procurement process and contract writing was a mess, adding four years of delays.

Though the ESA project was huge in cost, it was small in distance: only 3.5 miles of new tunnels and track. But it involved boring huge tunnels through bedrock and ended up building the most expensive mile of railroad track in the world, costing over $3 billion.

One big culprit was labor. In 2010 auditors found that 900 workers were each being paid about $1000 a day though only 700 workers were needed for the job. Nobody could explain what the other 200 workers were doing every day, aside from getting rich.

An investigation by the New York Times blamed the cozy relationship between labor unions and politicians, consultants who hired MTA bosses to gain more work and contractors and vendors regularly inflating their bids by 15% to 25% for what’s known as “the MTA factor,” i.e. the hassles of working with that agency.

Jobs like running the tunnel boring machines were staffed with 25 workers on the ESA project, about triple the number employed on the same equipment overseas. Elevators at the construction site each had an human operator even though they ran automatically. Crane operators also had an “oiler”, an unneeded throwback to older times.

All told, staffing for underground construction in New York City was quadruple that of similar jobs abroad.

The labor unions push back saying the work is dirty and dangerous and their members live in one of the most expensive cities in the world so they deserve more.

The RPA report also cites other problems including lengthy environmental reviews (up to seven years vs. two years in Europe), insurance and liability roadblocks, flawed project designs causing frequent (and expensive) change orders and a lack of post-project reviews to learn from mistakes.

If we are ever going to see New York City grow and prosper again, expanding (and repairing) its transportation system will be essential — if we don’t price ourselves out of business.